Stock Exchange: Piazza Affari: turns positive after starting in the red, here’s what happened

Some confidence returns to the stock exchanges. In the second part of the session, the markets took the upward road, albeit with many hesitations. The rescue plan of Credit Suisse by the rival UBS and with the support of the central authorities took effect. The fear was of a new Black Monday on the effect of a contagion in the banking world. In the morning, the Credit Suisse share price had fallen by more than 60% on the Swiss market. UBS also temporarily fell 11% before closing up 1.2%.

The positive performance of Wall Street in the afternoon also encouraged the recovery on European stock markets despite the troubles and collapse of the First Republic Bank. Thus Milan closed with a rise of 1.59% with the big banks once again making a decisive recovery. Frankfurt is up 1%.

Meanwhile, the reassurances from the authorities continued. Christine Lagarde, President of the ECB, spoke today to the European Parliament’s Committee on Economic and Monetary Affairs. “We are closely monitoring market developments, and are ready to respond, if necessary, to preserve price stability and the financial stability of the euro area”. Each decision will be taken on the basis of a careful assessment of the economic environment: “The high level of uncertainty reinforces the importance of a data-related approach to our decisions on official rates”.
Economy Minister Giancarlo Giorgetti also reassured himself on the sidelines of an event: “We believe that the repercussions on the Italian banking system are essentially insignificant,” he said.
Nervousness, however, remains high. The gold rush proves it, the shelter par excellence in times of storm. Today, the precious metal surpassed $2,000 an ounce, a level not seen since the early stages of the conflict in Ukraine. The framework remains fragile and it will take time to put the pieces of the new framework together. Operators are on the alert and fear new nasty surprises. Experts in these hectic days keep repeating that worries about the liquidity of European financial institutions are exaggerated. European banks are subject to very strict rules regarding liquidity requirements. This is demonstrated by the so-called liquidity coverage ratio. The objective of this mechanism is precisely to ensure that banks can overcome crises without stumbling blocks. In any case, the goal of regulation in the aftermath of the 2008 global financial crisis was to ensure that banks were no longer bailed out by the state. Now Credit Suisse is again supported by the state and central authority network. At risk there is not the coverage of liquidity as much as the maintenance of investor confidence.